6 Signs Your Organization Should Purchase Salesforce CPQ

I recently passed my Salesforce CPQ Specialist certification exam and have been working with some clients who are looking to undertake CPQ implementations. Therefore, I’ve recently been thinking a lot about when it makes sense for an organization to purchase Salesforce CPQ.

Salesforce CPQ offers a lot of powerful functionality, but it isn’t a cheap product. The more of Salesforce CPQ’s features your organization needs, the more value it will provide. Here are a few key indicators your company would benefit significantly from CPQ.

1. Complex Product Offerings

This is the “Configure” part of CPQ. If you sell products that need configuration, CPQ can be a lifesaver.

Products With Attributes

Let’s say you’re selling products that have different variations but the same price point, for example, shirts in different colors and sizes. In Sales Cloud, you’d need to track each color-size combination as a separate product. Your sales reps may then struggle to find the correct product. CPQ will allow your sales rep to easily track the size and color your customer is interested in against a single product.

Products Needing Configuration

Here’s another scenario: selling a product where some of the attributes result in a different price, such as a laptop with different options for screen size and memory. In Sales Cloud, each combination would need to be tracked as a different Product, but with CPQ, you can configure a single “Laptop” product with the screen size and memory the client needs. CPQ will generate the price point based on the configuration you have selected. Likewise, if you offer a combination pack of products at a different price point than you’d offer those products individually, CPQ lets you create a bundle that includes all those products at the combination pack price point.

In Sales Cloud, you’d need to have a different price book for the combination products prices, and your sales rep would need to remember to select the correct number of the correct products, introducing a lot of room for human error. Alternatively, you would need to implement a custom data schema to accommodate combination packages.

Further Product Customization

CPQ further offers tons of customization to your products beyond this. It lets you specify the conditions when sales reps should be prevented from selecting a certain product, when the system should hide certain products from the sales rep’s view, and when products should be automatically added to your quote.

If your product offerings have this level of complexity, CPQ can remove a lot of pain from your sales reps’ process!

2. Complex Pricing Models

This is part of the “Pricing” part of CPQ. Sales Cloud lets you track the unit price and quantity on a Quote line item, but that’s about it. But if you sell products that use different pricing models — such as subscription licenses, products that should just be a percentage of the total, or products for which you use a cost-plus pricing model — it takes a lot of custom configuration in Sales Cloud to get your quote to have the right prices for those products and represent the prices in a way that will make sense to your sales reps and customers.

Tracking Varying Pricing Models

CPQ allows you to easily track all of these different pricing models, even on the same quote! You can specify a regular list price pricing model, a subscription pricing model, a percentage of total pricing model, block pricing, or a cost-plus markup model on the product level. You can add products with different pricing models to the same quote, and CPQ will do all the hard work of figuring out the price for each.

Subscription Pricing

For subscription products, you can indicate the standard term length and the list price on the product. The sales rep will then only need to indicate the length of the term you are quoting and the number of subscriptions, and CPQ will do the rest. For example, if your product’s standard list price is $100 for a 12-month term, all a sales rep will need to do on their quote is indicate a customer wants 10 subscription licenses for 24 months, and CPQ will figure out that the net price of that quote line is $2000.

Percent of Total Products

For percent of total products, you can indicate if you want the product’s price to be the percent of the total for the whole quote or just a subset of products on the quote, and CPQ will figure out how to price the product based on the other products selected on that particular quote. You can even specify a threshold that a percent of a total product doesn’t drop below.

Block Pricing Products

For products that you sell at different price tiers, for example, $10 for the first six units, $20 for seven to twelve units, and so on, you can set up block pricing. This allows you to define what you charge at each tier and indicate if you have an overage rate for any of the tiers. CPQ will then set the price of the product on your quote based on the quantity selected.

Cost-Plus-Markup Products

For cost-plus-markup products, you’ll specify the product’s cost on the product level, and you can indicate on your quote line what you want the markup to be, either as a percentage of the product’s cost or dollar amount.

If you sell products that have one or more of these different pricing models, CPQ could be a good fit for your organization!

3. Complex Pricing Logic

This is part of the “Pricing” part of CPQ. Let’s say your company gives a 5% discount on all software products on a quote when a customer orders $10,000 of software or more. In Sales Cloud, you’d need custom configuration to loop through your quote items and update the prices on the ones that meet that criteria if those conditions are met. In CPQ, you can use price rules to easily check for the conditions and apply the discount when appropriate.

Volume Pricing

Here’s another example: your company sells a product at a unit price of $100 per product if a customer is getting fewer than 10 products but will offer them at $90 per product if the customer gets 11 units or more. You also sell a subscription product that is $10/month if they purchase the subscription for a year but only $5/month if they purchase the subscription for 2 years or longer. With Sales Cloud, you’d need to do some pretty sophisticated custom configuration to make sure these pricing models get applied, but with CPQ, you can leverage discount schedules to easily specify the pricing tiers where the different price points apply.

Customer-Specific Pricing

Additionally, CPQ lets you apply a customer-specific price to any given product if your company has agreed to different price points with specific customers. In Sales Cloud, you’d need to create separate price books for each customer and make sure the sales rep selects the proper price book.

If your company requires complex logic to set products to the correct price on your quotes, you can leverage CPQ to easily apply that logic.

4. Complex Discount Mechanisms

Volume Discounting

This is another part of the “Pricing” component of CPQ. Let’s say that some of your products have discounts that apply to only units purchased in excess of a certain number. For example, you charge $100 per unit for the first 10 units of a certain type of product and then $90 per unit for each unit of that product type purchased after that first 10. In Sales Cloud, you’d need to do some fairly complex custom configuration to determine the correct amount across quote lines in the quote and then set the relevant quote items’ prices to the correct amount. CPQ allows you to easily do this with slab discount schedules.

Compound Discounting

Let’s say that you have certain discounts you want applied on top of other discounts. For example, you have the 5% discount on software purchases over $10,000, but then you also want to subsequently apply a 10% discount to companies you work with as partners and a 15% discount that you want to apply to companies who distribute your products on top of initial discount. In Sales Cloud, you would need to build custom configurations to achieve this. CPQ has the concept of a price waterfall, applying different discounts in the correct order, ensuring your quotes end up with the correct price.

Segmented Discounting

If you sell subscriptions and want to apply discounts to only a specific segment of the subscription, for example, giving a 10% discount on only the first year of a three-year subscription, CPQ allows you to do this with multi-dimensional quoting.

If your organization has this level of complexity when it comes to business rules to apply discounts, CPQ could be a good fit.

5. Complex Quote Documents

When it comes to the quote documents you share with your customers, appearance matters. Your quote document reflects your company’s level of competence and professionalism; a good-looking quote will help to inspire confidence in your customers that your company is reliable and knows what they are doing.

Custom Quote Templates

CPQ allows you to set up multiple quote templates and gives you a huge amount of control over virtually every aspect of the quote document. You can specify the quote document’s styling and the appearance of the table of your quote lines down to each column’s order of appearance and the percentage of space each takes up on your table.

Hiding and Displaying Details

You can also indicate if a certain section of the quote or column should be hidden under certain conditions. For example, say that you have a quote to which no discounts are applied. You can have your quote document hide the discount column for that quote but display it on a quote where a discount is applied to one or more items. Similarly, you can break your quote items into separate tables if you want to group them by product type, pricing type, or some other criteria and hide the tables that don’t have any content.

Terms and Conditions

Another point of complexity in quote documents is the terms and conditions. If you have specific terms that only should display if the quote includes a specific kind of product or your company will honor a quote longer for a distributor than a retail customer, you can define the conditions for which each quote term should display, and CPQ will include only the relevant terms for your quote.

Quote Addendums

Sometimes it’s important to include additional documents to your quotes if your customers often need to see additional documentation, such as proof of licensure and insurance. With CQP, you can add additional documents to your Quote Template, allowing your sales reps to easily include those documents in the quote document they are generating when they need to.

If your quote documents require these types of features, CPQ will save your sales reps a huge amount of time by letting them generate the right quote documents with the right information at the push of a button rather than spending hours compiling, checking, revising quote documents, and tracking down the additional documents they need to include in the quote.

6. Complex Approvals

Approvals are important when you’re working on big deals to ensure that sales reps aren’t getting ahead of themselves and offering product combinations at prices that they shouldn’t be. With CPQ, you can leverage the Advanced Approvals package to set up parallel approvals to avoid bottlenecks.

In Sales Cloud, approvals must happen sequentially. If your opportunity approval process requires the approval of the Vice President of Finance and Vice President of Sales, and it takes Finance two weeks to approve the Opportunity, and it then takes Sales one and half weeks, the opportunity will have been sitting waiting for approval for almost a full month! With Advanced Approvals, you can set up parallel approvals so Finance and Sales can approve the Opportunity concurrently. In this scenario, the opportunity gets approved after just the two weeks it takes Finance to grant approval—almost halving the opportunity’s approval time!

Additionally, Advanced Approvals allow for smart approvals, meaning that once an opportunity is submitted for reapproval, the parties who have already approved it don’t have to approve it again. Let’s say that a sales rep submitted an opportunity with a 20% discount. Finance approved the Opportunity, but Sales thought the discount was too high. When the Sales Rep lowers the discount to 18% and resubmits it for approval, it will bypass Finance and only require the approval of Sales, thus streamlining the approval process and making your company more efficient!

Our Salesforce Experts at Soliant Consulting Can Help!

CPQ is a powerful tool, but building it out in a way that will work for your business is a major undertaking. It requires a significant amount of thought, planning, and strategy. However, a good CPQ implementation can pay huge dividends by saving your sales reps time and frustration. This increases your company’s overall efficiency, avoids human errors on quotes, and speeds up your sales cycle. It also frees up your sales reps to do what they do best rather than wasting time building out quote documents and correcting errors.

Soliant Consulting’s CPQ and Salesforce experts have experience with CPQ implementations and can help you get the most out of this product. Contact us to discuss how you can use CPQ to meet your needs if your company is exhibiting the six signs above.

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